The central bank has the ability to create money; this means it:

Question

Quizplus · Accepted Answer

The central bank can create money through various means such as printing physical currency or increasing the reserve requirements for commercial banks. This ability to create money can impact the rate of inflation in the economy as an increase in the money supply can lead to higher inflation. Therefore, option C is the best choice as the central bank can impact the rate of inflation through its money creation abilities. Options A, B, and D are incorrect as they do not accurately reflect the central bank's ability to create money and its impact on the economy.

The Central Bank Has the Ability to Create Money; This